In a review of Fortune Tellers: The Story of America’s First Economic Forecasters by Walter A. Friedman, James Surowiecki considers a problem facing modern forecasters – “there may actually be too much information out there”:
Now, Herbert Hoover would have said this deluge of data was a good thing. He believed that if businesspeople had access to more information about how the economy was doing, they would act in what economists call a countercyclical fashion. In other words, if they understood that the economy was on the verge of overheating, they’d be more cautious, and vice versa. But it seems just as likely that there are times when the flood of information leads businesspeople and investors to jump on the bandwagon instead—acting recklessly in boom times and too cautiously when things are slow, which ends up amplifying the trend, rather than countering it. Markets and economies work best when people are able to think for themselves. But when everyone is shouting at the same time, it can be hard to do that.
The real issue here is one that the economist Oskar Morgenstern identified back in the late 1920s—namely, that economic predictions actually end up shaping the very outcomes they’re trying to predict. And the more predictions you have, the more complex that Möbius strip becomes. In that sense, for all the challenges they faced, men like [business theoriest Roger] Babson and [economist Irving] Fisher had it easy, since forecasts were few and far between. The real irony of our forecasting boom is that as fortune-tellers proliferate, fortunes become harder to read.
The Dish 